Wednesday, December 31, 2008

…So the result of months of discounts led to what I experienced at a European store called Oilily in early December. Those of you that are familiar with the store know that it is an uber-high end store of the $100 T-shirt variety.Here’s how it went…

I walked in the store and was greeted by a sales girl who instructed me to draw from a hat. When I asked why, she said that I was “drawing my discount”. I reached in and pulled out a small piece of paper with “40%” written on it. She grabbed it out of my hand and said, “Oh, you can do better than that”. I reached in again and found a 55% paper. She seemed satisfied by this. The deal they had running was that anything not already on sale would be discounted by the amount you drew. So, my discount was a minimum of 55%. The thing was that most of the store was 60% to 70% anyway.

This was shocking! Demand had dropped off so much in this mall and particularly for this specific retailer that they were liquidating there merchandise at a two-thirds discount. Amazing! Business School showed me supply and demand in depth, but that day Oilily cemented it in my mind.

A few weeks after my Business School lesson from Oilily, I took my $500 flight home (strange how airlines don’t seem to be adjusting to the recession- and they have been going bankrupt lately… hmmmm.) I spent a week with my family and then headed to Macy’s.I pulled up to the mall at around lunchtime and stumbled in to a mad house of people. It seemed the store was having a one-day sale. On top of the one-day sale, there had been a coupon mailed out for an additional 20% off of the first $50 purchased in the store before 1PM. Here again, Business School taught me a concept, but JC Penny’s brought it home…

Price Discrimination.

JCP was so desperate to capture more sales that they catered to a group of people they normally wouldn’t sell to… the people who clip coupons and are willing to wake up in the morning the day after Christmas for a deal. And it worked. At least they sold lots of stuff – I do question how much money they were making on the items they sold to the people with absolutely no opportunity cost of time. I guess we’ll fins out next quarter.

Between Christmas in October, Oilily, and JC Penny, this has been a retail season to remember. It certainly rooted many of the lessons I learned in Business School into my head anyway. I hope for your sake and for mine that I stop learning lessons from the real world soon.

Tuesday, December 30, 2008

I’ve been sitting on my Southwest Airlines flight for about 20 minutes now… only 3 hours to go. So this seems like a good time to talk about the last few months and some of the ridiculous things retailers have been doing.

It all started shortly before Halloween. Yes before. Do you remember the Christmas lights, music, and store sales firing up on Oct 25th? That’s when it all began in my neck of the woods anyway. At the time, I was one month into business school and I began thinking, “Why are retailers doing this?”. It wasn’t a very hard question to answer. They were doing it because no one was shopping… it was like someone had turned the faucet off. In other words, because of the heightened level of hysteria about the economy, the demand curve for… everything shifted in. People in general were willing to purchase far less at the current prices than they had just a few months earlier.

Business school has taught me that the natural reaction here was for the retailers to lower prices and try and shift the demand curve back (2 separate events). For the first part, everything began to go on sale. And the second part is why we were listening to Jingle Bell Rock and staring at tinsel at the same time as pumpkin patches were littered with children and hay.

Like most good things, the resulting quantities sold from the fire sales didn’t last. By the time Black Friday rolled around, retailers had been offering “Christmas Sales” for over a month. So what happened when the retailers offered “normal” Black Friday discounts? Everyone said that the sales weren’t that great. What did they expect? Hawaiians aren’t impressed with Malibu.

Sunday, December 28, 2008

I have been vacationing in my hometown for the last nine days and am now getting ready for my return flight. Actually, I just printed my boarding pass for my Southwest Flight... I got boarding group A!

It was a strange thing to have no work and no school for the last nine days. Now I am returning to work, school is just around the corner, and I am still looking for a new job in one of the worst economies in the last 30 years. On top of it, I am taking a class that I have been dreading since I was accepted, Stats. Nothing to worry about, though. I can learn anything, right?

So here we go... I will be purchasing my textbooks in the next day or two, finalizing all of the projects I set out to do over the school break, and working out in a habitual way. I should tell you that working out has been my great success over this break. Every time I go home for vacation, I bring several books and plans to jump-start my physical activity. Most years I hardly read at all and go running once. This year I left the books at home and had a simple goal... run every other day. After tomorrow I will have met my goal - gotta wake up early though.

I am beginning to feel the jitter of business school again. My legs are restless, my head hurts a bit, and my heart rate is slightly elevated. I know it sounds a dramatic, but this is a marathon and I have only run the first couple of miles. I have had my drink of water and recovering breaths, now back to the race.

I look forward to sharing the next chapter of my journey with you over the coming weeks. So, please keep checking in.

Monday, December 22, 2008

The professor entered the room, told us how much time we had for the exam, and then wrote the end time on the board. He passed the exams out face down and then told us to start. The pages flipped in unison. I surveyed all the questions and underlined a few of the words that I thought were important. This was sort of my brain warm up.

I then began to answer the first question. After I looked at it, I realized that I didn’t know exactly which graph to use or even really how to answer the question. So I evoked plan B, which was to start with number 2. I answered the second question and then went back to the 1st. Along the way I crossed out graphs and words, changed entire sections of my answers, and sweated a lot.

Finally I made it to the special multiple-choice questions. These are multiple-choice questions where you have 4 possible answers. Of those 4, all of them, some of them, or none of them could be right. In addition, you can write an explanation or graph to go with your selection, but this can both help you or hurt you. I discovered early on with the practice testing that my first instinct was usually wrong on these. So, I pondered each one and answered them the best I could. Once the multiple choice questions were out of the way, I looked over the whole test again. With 10 minutes left, the professor interrupted the test to tell us there were a few typos. One of the typos was that a question that indicated a price control should have actually said that there were no price controls. Luckily he gave us the option of leaving our answers the way they were and just making a note on the page. I did that and then turned my test in.

By the end of the test, my ears were red, my mouth was dry, and my brain was complete mush. Although, if I am honest, my brain was less mushy than after the midterm.

I was about the tenth person to walk out of the classroom. I joined a group of students talking about the exam. One by one the class trickled out and the attitude was the same for all of us. We had no idea how we did. This is the toughest thing I’ve had to deal with in Business School so far. I felt the same way after the midterm, but this time I decided that it wasn’t going to bother me. It didn’t matter, it was over and there was nothing I could do about it.

After the entire class finished the exam, we all headed over to a local pub and several people got hammered. I limited my intake to two beers and talked with everyone I could. This was a good experience because I actually got to know two of my classmates better. That has been a goal and a focus of mine, but until this particular happy hour I hadn’t done a very good job of it.The night ended with a walk back to my car with one of the classmates I talked to quite a bit. The campus was dark and the calm began setting in. It was finally done. My first quarter of Business School was over.

Sunday, December 21, 2008

I just realized that in my busyness of the early part of this month I failed to describe to you a noteworthy experience… The Econ Final Exam.

First, I should back up a day. Fresh off the Accounting Final, 3 of my group members including myself gathered at a downtown office to spend 7 hours or so studying accounting. We started the meeting off the way every good Business School meeting starts… with food.The 3 of us met at an Indian restaurant in the building. They had fantastic Naan. After a few drinks, the naan, and some curry we headed up stairs and got to work. 2.5 hours later with a full white board and a haggard look on all three of our faces, we took a detour to a local restaurant for some appetizers and drinks. The place was actually having trivia night. The winner won a discount on their final bill equal to the total number of points they earned during the competition. We just watched.

After about 40 minutes, we returned to the conference room and proceeded to mark up the white board again. By the end of the night, we made it through 2 practice exams… every question. We actually took turns graphing, explaining, and discussing the questions. We all headed home for the night with minor headaches.The next day I was off of work so I slept in until I woke up naturally (11AM). The weight of the exam to take place that evening loomed over me from the time I rolled out of bed, but I didn’t spend any time studying that day. I figured out a long time ago that my cutoff for studying is the night before at around 3AM.

So, I enjoyed my day off and then headed to campus. I met my group members in the MBA lounge where they were studying again. I guess they don’t have the same cutoff. I participated for a few minutes and actually got an explanation on one of the graphs that I didn’t fully understand. That was good, but I was done after just a few minutes.After a short while, we all headed up to class. As the room filled up, the chatter began to pick up in volume. Most of us were smiling nervously in our chairs awaiting an exam that we had been dreading for the entire quarter. There we sat… Business School lambs to the slaughter.

Thursday, December 18, 2008

I know you all have been waiting so I will get right to the point. Last night I finally received my grades!

In Economics I received "better than a B" (I'll explain this in a second). In Accounting I received something between a B+ and an A- (this is due to the University using a point grading scale instead of letter grades).

The reason why I say "better than a B" in Economics is because of a late grade situation. The story is that the professor had a conference to go to and would be submitting our grades late as a result. However, many of us have a deadline to receive reimbursement from our employers, so we needed our grades sooner. As a compromise the professor gave us all the lowest grade he expected us to get, which in my case was a B. He will later change my grade to whatever I actually earned. In the meantime, I have 5K coming from my employer. No dead-weight loss on that transaction.

So, I am breathing huge sighs of relief. I know I said it before, but now I really feel like I am 1/9 of the way to an MBA degree. I am also relatively happy with my grades, which are icing on the networking/learning cake. In case you don't remember, networking and learning are are my two major priorities. I should actually say that learning how to network is my first priority, but I am improving here so I will leave it as "networking".

Well, that's it for tonight. I am headed home for Christmas, so I hope to be writing a lot over the next week or two. So, stay tuned for more market banter, interesting thoughts on random books, and flash backs to my first quarter.

Sunday, December 14, 2008

It's Saturday night and I just got home from my second Christmas party of the week. I've been sleeping in on my days off of work and doing, well nothing much at all.

That's right. One of the best parts about being a student is all of the vacations. Since my school is on the quarter system, I have a month off until I have to start classes again. I was exaggerating a bit when I said that I have been doing nothing. In fact, today I finally got a work out in- desperately needed from all of the sitting and eating I've done over the last 3 months. I also finally went through the mail that had been piling up. I recycled a 15 gallon bag full of papers and shredded another one. I honestly can't believe how much mail we get!

I've got other B-School vacation projects planned including cleaning the garage, selling a record player, paying lots of bills, and sleeping in every chance I get. This should be a pretty stress free couple of weeks... except one thing. Grades.

Grades will be reported next week and I am a little nervous. Although this is Business School, and learning is the important thing, I can't deny my competitive or achiever nature. I want to learn a lot and get high marks. I'll settle for decent grades and a lot of learning though, I guess.

So yes, the stock market is sinking into the abyss, 3 of the largest US companies are on the verge of collapse, the USA is becoming the USSA, and I am worried about how I did in Econ and Accounting.

I will keep you posted, because I am just certain that you are worried as well. Stay tuned!

Tuesday, December 09, 2008

It is 3:00PM and I will be sitting for my last final exam in approximately 3 hours and 30 minutes. I will be finishing in approximately 5 hours and 20 minutes... not that I am counting. Not that I am so excited to have a break from classes, assignments, group meetings, conference calls, study sessions, textbooks, cases, and the chaotic pace that has defined my last few months. Nope, not excited a bit.

OK, I am very excited. Although this is sort of an odd time right now. I spent last night studying with two of the guys in my group until 1AM, and now have a few hours before the final. I am starting to feel the stress melt sway, while at the same time, increase.

So what's the big deal right? One little final left. I didn't miss a day of class and have put in several hours studying. Piece of cake, right?

Well, not exactly. This final is in Economics. Remember, the time when the professor announced during the third week of class that the "principles" part of the class was over. That is this one. This is the class that has introduced concepts including , but not limited to, the perfect competition model, indifference curves/map, income elasticity, price elasticity, consumption price path, deriving a demand curve, isoquants and isocosts, Natural Monopoly, Cartels, the Kos theorem, the equimarginal principle, and so much more.

And each one of the above items has a graph that goes with it. Do I know these graphs well? Mostly, I guess.

So yeah Business School, you've kicked my butt a little bit this quarter with this economics stuff, but I'm fighting back. I will come tonight with a four colored pen (the clicky kind), graph paper, and a twinkle in my eye. I will do well (remember the goal is 2/3 of 2/3) and I will smile as I turn my test in, swing the door open and bring the first quarter of business school to a close.

So look for me to be riding off in the sunset later tonight. I'll see you on the other side.